Capital Investment

Agriculture Directorate

Outline of the Scheme

Nearly one third of our horticultural produce, especially fruits and vegetables are wasted, mainly on account of poor cold storage and other storage facilities. A new capital investment subsidy scheme for construction/expansion/modernisation of cold storage and storages for horticulture produce is introduced. It would help in minimising post-harvest losses being suffered by farmers, particularly small and marginal farmers. The scheme has been implemented by National Horticulture Board (NHB), Ministry of Agriculture in collaboration with National Bank for Agriculture and Rural Development (NABARD). The scheme is a part of the ongoing Post Harvest Management (PHM) scheme of National Horticulture Board (NHB), of which cold storage is one of the components. The projects would also cover the facilities constructed under controlled and modified atmosphere on the same parameters as have been stipulated for construction of cold storages under the Scheme. The cold storage component will be excluded from the present ongoing scheme of NHB and Department of Food Processing Industries (DFPI). However, the following cold storage schemes of DFPI would continue:

Where cold storage is a subsidiary and small component of an integrated food-processing unit and the cold storage facility is meant for captive use for storage of raw material or the processed product.

Facilities under the scheme 'Food Park'.

The controlled/modified atmospheric storage systems

Eligible Organisations.

Project Cost.

The project cost will depend upon the capacity, technology used for cold storage/storages for horticulture produce and will be arrived at on the basis of actual/estimates of architects/invoice prices of machineries, etc., subject to the norms of appraisal of financing banks/NABARD regarding technical feasibility/financial viability.

Eligible Institutions for refinance from NABARD.

Commercial Banks (CBs), Regional Rural Banks (RRBs), State Co-operative Banks (SCBs), State Co-operative Agricultural and Rural Development Banks (SCARDBs), Agriculture Development Finance Companies (ADFCs) and other institutions that are eligible to obtain refinance assistance from NABARD.

Technical Aspects.

Checklist. The checklist to facilitate the compliance of the requirements of formulation/scrutiny/appraisal before submission of the proposals to NABARD in respect of cold storage and storage for onions is prepared as prescribed.

Modern Design/Technology and Energy Saving Equipments/Devices to be adopted to avoid obsolescence of machinery, etc.

Improvement in technology like shifting from Diffuser system to Gravity Cooling System/Fincoil System, etc

A back up arrangement of supply of power through diesel generating sets would be necessary for cold storages and it would form part of the capital cost of the project

Quantum of Subsidy.

The Subsidy will be available only in States/Union Territories/Areas which do not control rentals for cold storages under and statutory or administrative order. In addition, the State Governments would be advised to carry out market reforms to facilitate access of producers to primary markets, enhance holding and carrying capacity of producers/farmers and introduce measures to ensure transparency in transactions. The Scheme should be technically feasible and financially viable.

The office of the Agriculture Marketing Adviser (AMA), directorate of Marketing & Inspection would continue to persuade removal of control on rentals in those states where the respective states are still operating their own Cold Storage control Acts.

AMA will also provide free consultancy support for construction of cold storages and also manpower-training, especially to the North-Eastern States.

The units cost permissible for the purpose of calculation of subsidy is 25% of the project cost arrived as per paragraph (4) above or the ceilings mentioned below, whichever is less.

Storage for horticulture produce like onion Rs.2000 per tonne The permissible subsidy calculated as above is subject to a maximum of Rs.50 lakh per project. However, for the projects in the North-Eastern States, maximum subsidy admissible would be Rs.60 lakh @ 33.33% of the project cost. For calculating subsidy, the capacity of cold storage can be decided by providing a volume of 3.4 cum. per tonne or 120 cft. per tonne of produce.

Projects upto 5000 tonnes capacity would be preferred. The banks may sanction projects having cold storage capacity of more than 5000 tonnes also subject to the normal techno-financial appraisal but the maximum amount of subsidy under these projects would be calculated as per the guidelines at sub paragraph (iii) above and restricted to Rs.50 lakh and in the case of North-Eastern States, the limit of subsidy would be Rs.60 lakh.

The sanction/release of subsidy under the Scheme is subject to availability of funds, the instructions/guidelines issued by the Government of India/NHB from time to time in this regard.

Term Loan / Margin Money.

The margin money is 25% for the term loan. 50% of the project cost can be raised as term loan from institutional agencies. The eligible amount of subsidy also would be allowed as term loan.

The value of land to be computed in the project cost should not exceed 10% of the project cost. In other words, in case the cost of the land exceeds 10% of the cost of project, such value to the extent of 10% of the total cost should only be computed in the project cost. The cost of land computed in the project cost is to be reckoned towards the margin money required to be met by the enterprise. The above is also subject to the following conditions:

The cost of the land will be computed in the project cost only when the land is to be purchased by the enterprise.

The cost of the land should be the purchase value and not the market value.

The value of that portion of the land that is need based for the project only is included

Rate of Interest to be charged from borrower.

Size of limit

Commercial Banks

RRBs/ADFCs/SCBs/SCARDBs

(i) upto Rs. 2 lakh

Not exceeding PLR of the bank

Not exceeding PLR of the convener bank of the State Level Bankers' Committee (SLBC) of the concerned State

(ii) Above Rs.2 lakh

Not exceeding 1% above PLR of the bank

Not exceeding 1% above PLR charged by the convenor bank of the State Level Bankers' Committee (SLBC) of the concerned State

Rate of Interest on refinance amount to be charged to financing banks.

8.5% p.a.

Quantum of refinance.

90% of amount financed to borrower (95% in case of SCARDBs in North-Eastern Region and Sikkim).

Repayment period.

Repayment period will depend upon the cash flow and will be upto to 9 years including a grace period of 2 years.

Period of implementation of project.

Upto March 2002 (likely to be extended).

Other modalities.

NABARD would release back ended subsidy to the financing bank on submission of commissioning certificate and the same would be dealt with as provided in sub paragraphs (iii) & (iv) below.

In case the unit has not submitted the commissioning certificate, NABARD would refund the subsidy to NHB.

Adjustment in Borrowers' Account: The subsidy released by NABARD to the banks on behalf of individual units that sanctioned assistance will be kept in a separate account. The adjustment of subsidy will be on the pattern of back-ended subsidy. Accordingly, the full project cost including the subsidy amount but excluding the margin money contribution from the beneficiary would be disbursed as loan by the banks. The repayment schedule will be drawn on the loan amount in such a way that the subsidy amount is adjusted after the bank loan portion (excluding subsidy) is liquidated.

No interest Chargeable on subsidy portion : The subsidy admissible to the borrower under the Scheme will be kept in the Subsidy Reserve Fund A/c. - borrower-wise in the books of the financing banks. No interest should be applied on this by the bank. In view of this, for the purpose of charging interest on the loan, the subsidy amount should be excluded. Suitable instructions to banks in this regard would be issued by RBI.